Question 6 Your parents are planning to retire in 18 years. They currently have £ 250,000, and they would like to have £ 1,000,000 when they retire. What annual rate of interest would they have to earn on their £ 250,000 in order to reach their goal, assuming they save no more money?
Question 7 What is the future value of a 5-year ordinary annuity that promises to pay you £ 300 each year? The rate of interest is 7 percent.
Question 8 What is the future value of a 5-year annuity due that promises to pay out £ 300 each year? Assume that all payments are reinvested at 7% a year, until year 5.
Question 9 A company invests £ 4 million to clear a tract of land and to set out some young pine trees. The trees will mature in 10 years, at which time the company plans to sell the forest at an expected price of £ 8 million. What is company’s expected rate of return?
Question 10 Rachel wants a refrigerator that costs £ 12000. She has arranged to borrow the total purchase price of refrigerator from a finance company at a simple interest rate equal to 12 percent. The loan requires quarterly payments for a period of three years. If the first payment is due three months after purchasing the refrigerator, what will be the amount of her quarterly payments on the loan?